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HomeMy WebLinkAboutMinutes - Audit Investment Finance Committee 04/25/2017 L-- : --. - .. MINUTES REGULAR MEETING OF THE PALM DESERT '• ! ern roi AUDIT, INVESTMENT & FINANCE COMMITTEE �` Tuesday, April 25, 2017 I. CALL TO ORDER Chairman Moore called the meeting to order at 10:00 a.m. Present Absent Lauri Aylaian, City Manager (10:29 a.m.) Jan Harnik, Mayor Russell Campbell, Community Member Brian Holcombe, Community Member Robert Hargreaves, City Attorney Robert Leo, Community Member Sabby Jonathan, Mayor Pro Tempore Stan Sperling, Community Member Janet Moore, Chair, Director of Finance Also Present Jared Burns, Desert Willow Golf Resort Luis Espinoza, Assistant Finance Director Anthony Hernandez, Senior Financial Analyst Niamh Ortega, Recording Secretary II. ORAL COMMUNICATIONS A. None B. None III. APPROVAL OF MINUTES A. MINUTES OF THE MEETING OF MARCH 28, 2017 MOTION was made by Member Campbell to approve the Minutes of the regular meeting of the Palm Desert Audit, Investment and Finance Committee of March 28, 2017 as presented. Motion was seconded by Member Leo and carried by a vote of 6-0, with Campbell, Hargreaves, Jonathan, Leo, Sperling and Moore voting AYE; Aylaian, Harnik and Holcombe ABSENT. INVESTMENT & FINANCE COMMITTEE MINUTES April 25, 2017 IV. NEW BUSINESS A. ELECTION OF OFFICERS FOR AUDIT, INVESTMENT AND FINANCE COMMITTEE Chairman Moore reminded the Committee that this item was introduced at a previous meeting and it was suggested that it be added to this meeting's agenda. Member Jonathan stated that most committees are chaired by a citizen and staff provides the reports, making this committee unusual in its election of the Finance Director as chair. He asked if anyone was interested in chairing the Committee. Chairman Moore added that Council members could also chair the committee. Member Leo volunteered to chair the Committee, and Member Campbell volunteered for the position of Vice-Chair. MOTION was made by Member Hargreaves to confirm the nominations and elect Member Robert Leo as the Audit, Investment and Finance Committee Chair, and Member Russell Campbell as Committee Vice-Chair. Motion was seconded by Member Jonathan and carried by a vote of 6-0, with Campbell, Hargreaves, Jonathan, Moore, Sperling and Leo voting AYE; Aylaian, Harnik and Holcombe ABSENT. (Member Leo assumed the office of Chair for the remainder of the meeting.) B. FINANCIAL REPORT ON CITY INVESTMENT SCHEDULE AND SUMMARY OF CASH FOR MARCH 2017 Member Moore provided the report and stated that the book value for the month ended March 31, 2017 was $2,078,229. MOTION was made by Member Campbell to recommend that the City Council approve the City Investment Report for the period ended March 31, 2017. Motion was seconded by Member Sperling and carried by a vote of 6-0, with Campbell, Hargreaves, Jonathan, Moore, Sperling and Leo voting AYE; Aylaian, Harnik and Holcombe ABSENT. C. FINANCIAL REPORT ON LOCAL AGENCY INVESTMENT POOL ACCOUNT STATEMENTS FOR MARCH 2017 Member Moore summarized the reports provided. MOTION was made by Member Hargreaves to receive and file the reports for Local Agency Investment Fund (LAIF), California Asset Management Program (CAMP) and Riverside County Investment Pool. Motion was seconded by Member 2 INVESTMENT & FINANCE COMMITTEE MINUTES April 25, 2017 Hargreaves and carried by a vote of 6-0, with Campbell, Hargreaves, Jonathan, Moore, Sperling and Leo voting AYE; Aylaian, Harnik and Holcombe ABSENT. D. FINANCIAL REPORT ON CITY FOR MARCH 2017 Member Moore indicated that the City is on track compared to budget. TOT and sales tax are both up when compared to last year's revenues at this time. Member Jonathan asked for an overview of the Fire Department line item contained in the report. Member Moore responded that it is on the report so members can see the expenditures. Mr. Espinoza added that a transfer for any shortfall would be made at the end of the fiscal year under "Interfund Transfers". In response to question by Member Jonathan, Member Moore and Mr. Espinoza gave an overview of various line items and general schedule of when payments are typically received. The general remittance schedule from the County and State remains the same from year to year. Member Moore also informed the Committee that Short- term Rental revenues just passed the $1 million mark. MOTION was made by Member Hargreaves to receive and file the City financial report through March 2017 as presented. Motion was seconded by Member Campbell and carried by a vote of 6-0, with Campbell, Hargreaves, Holcombe, Jonathan, Moore, Sperling and Leo voting AYE; Aylaian, Harnik and Holcombe ABSENT. E. FINANCIAL REPORT ON PARKVIEW PROFESSIONAL OFFICE BUILDINGS FOR MARCH 2017 Mr. Hernandez provided a summary of the report as provided. Member Jonathan asked if the remodel plan for repairs, maintenance and aesthetics was moving forward. Member Moore responded that it is proposed for the FY 17/18 budget, and Council could direct staff at that point to include it. Member Moore indicated that she would see if she had a copy of the most recent drawings to provide to Member Jonathan so he could see what is currently proposed. There was discussion regarding the RAP Foundation's upcoming move to their new facility and the possibility of current Parkview tenants making the move to RAP's new building and the offices it will provide. Staff has determined that most of the tenants will remain at the Parkview building, and ACT for MS will be acquiring an additional suite when they extend their lease. MOTION was made by Member Campbell to receive and file the Parkview Office Building financial report through March 2017 as presented. Motion was 3 INVESTMENT & FINANCE COMMITTEE MINUTES April 25, 2017 seconded by Member Hargreaves and carried by a vote of 6-0, with Campbell, Hargreaves, Holcombe, Jonathan, Moore, Sperling and Leo voting AYE; Aylaian, Harnik and Holcombe ABSENT. F. FINANCIAL REPORT ON PALM DESERT RECREATIONAL FACILITIES CORPORATION FOR MARCH 2017 Mr. Burns reported that last month was the best March on record since Desert Willow's beginning in 1997. Revenues for the month were $1,838,000, the highest on record. Mr. Burns summarized the report presented, and overall remains on pace for the year. He expects April to also be a successful month. MOTION was made by Member Campbell to receive and file the Parkview Office Building financial report through March 2017 as presented. Motion was seconded by Member Hargreaves and carried by a vote of 7-0, with Aylaian, Campbell, Hargreaves, Holcombe, Jonathan, Moore, Sperling and Leo voting AYE; Harnik and Holcombe ABSENT. G. CONSIDERATION OF QUARTERLY MEETING SCHEDULE FOR AUDIT, INVESTMENT AND FINANCE COMMITTEE Member Moore reminded the Committee that this idea was presented at the last meeting, and reviewed various options of how to arrange the schedule to accommodate holiday schedules and required meetings to meet audit deadlines. There was also discussion as to the frequency of reports that would be prepared and disbursed to the Committee and Council. Member Campbell shared that, as he had expressed to Council members in the past, he felt this Committee was more of an oversight Committee and there is no input as far as project selection and completion. Member Jonathan responded that he views the Committee as an oversight committee which watches over the budget and financial results to ensure the City is proceeding in a manner that it should, and asked if Member Campbell thought there was another role that this committee could play. Member Campbell asked if the Committee should be more involved with capital project decisions and budget oversight. Member Aylaian explained that these projects are currently analyzed at a staff level and take into account many factors surrounding construction, recurring maintenance and availability of funds. Staff makes their recommendation to the Council at a budget study session dedicated primarily to capital projects. Council then determines the ranking of projects or recommends alternative projects. Member Campbell indicated he was satisfied with this process. 4 INVESTMENT & FINANCE COMMITTEE MINUTES April 25, 2017 Member Jonathan emphasized that the work performed by the Audit, Investment & Finance Committee was valuable to the Committee and the City. Council does not necessarily review every report to the extent that the Committee would, so the Council relies on the Committee's review and recommendations. Various suggestions on meeting months and frequency were discussed. A tentative schedule was determined of meeting every other month beginning in July 2017. Staff will review the proposed annual schedule to ensure all audit and reporting responsibilities and obligations are fulfilled, and the Committee agreed that there may be months where a time- sensitive action is required and a special meeting could be called. MOTION was made by Member Campbell to begin a modified meeting schedule beginning in July 2017, and meeting every other month thereafter. Motion was seconded by Member Aylaian and carried by a vote of 7-0, with Aylaian, Campbell, Hargreaves, Holcombe, Jonathan, Moore, Sperling and Leo voting AYE; Harnik and Holcombe ABSENT. H. RECOMMENDATION OF AUDITING FIRM TO PROVIDE PROFESSIONAL AUDITING SERVICES FOR THE CITY OF PALM DESERT Chairman Leo informed the Committee that the interview panel met earlier in the week to interview two auditing firms. Mr. Espinoza thanked the members and staff for their participation throughout the process. A request for proposals was issued in March. Five companies responded, and the six-member interview panel rated the responses in order of preference. Two firms were selected to interview. The Director of Finance and Assistant Finance Director were not part of the decision-making panel, but were in attendance to facilitate the interviews. The interview panel felt that Lance, Soli & Lunghard, LLP (LSL) should be recommended for Council approval as the City's auditors. Member Aylaian asked if there was a particular reason LSL was chosen. Member Campbell responded that they all had similar computer software for their own auditing and controls. LSL were more familiar with Palm Desert and its entities, and expressed great interest in the city itself. The cost was not a factor of the decision, although both firms were similarly priced. Chairman Leo discussed the concept raised during the interviews of certified ethical hackers, or individuals hired to expose any weaknesses in the City's system, and Member Moore informed the Committee that it is something that can be discussed with the incoming auditors if the City 5 INVESTMENT & FINANCE COMMITTEE MINUTES April 25, 2017 wanted to add it to the scope of the project. Mr. Espinoza added that the current auditors also use a similar program, and that the auditing process is much more sophisticated, electronically driven by algorithms rather than an auditor's selection of random files. The term of the contract is from 2017 through 2022. The contract includes the option to terminate sooner if staff and/or Council are dissatisfied with the auditors. MOTION was made by Member Campbell to recommend that the City Council authorize a contract with Lance, Soli & Lunghard, LLP, to provide professional auditing services for the City of Palm Desert for the fiscal years ending June 30, 2017 through 2022. Motion was seconded by Member Hargreaves and carried by a vote of 7-0, with Aylaian, Campbell, Hargreaves, Holcombe, Jonathan, Moore, Sperling and Leo voting AYE; Harnik and Holcombe ABSENT. V. CONTINUED BUSINESS None. VI. OLD BUSINESS None. VII. INFORMATIONAL ITEMS None. VIII. ADJOURNMENT With Committee concurrence, Chairman Leo adjourned the meeting at 10:56 a.m. Niamh Ortega, Recordin retary 6